Bridging Home Loan: 3 Things You Should Know About This Loan-Type
The Australian housing market runs in cycles just like others around the world. This means that an investment opportunity presents itself in all market conditions. When you find that opportunity, make a series of timely decisions. Otherwise, someone else may snap it up. If you are short on funding, a bridging home loan comes in handy. Here are three things you should know about this loan-type.
The bridging home loan is compatible with the variable, fixed rate and owner-occupied home loan as well as the investment. This is a flexible option, which makes it possible to procure an investment property or switch to a new home.
A typical mortgage has a length of 15 or 30 years. A bridging loan, on the other hand, has a length of up to 12 months. The loan is short because its purpose is to bridge from one mortgage to another. It takes between three to four months to close a new home deal. Therefore, the loan acts as a cushion during those months. It is not a long-term solution. For investors, the time is enough to re-work finances around the additional property.
How Does it Work?
If you spot a real estate opportunity but already own a home and a mortgage, you become a buyer and seller. To go from one property to the next, you balance the existing mortgage and the new one. The bridging loan aids the balance. Owning two homes simultaneously is stressful because repayments do not stop. Thanks to the bridge, you can field the best offer on the current property while obtaining the best deal one the new one.
Bridging Home Loan Conclusion
Sometimes great deals unexpectedly show up in the Australian housing market. There is no reason to let them go by because you are short on funding. A bridging home loan offers a viable, short-term solution. For more information, contact our Mortgage House financial professionals.